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Contains the format for the preparation of final accounts of a banking company in India prepared by B.V.Raghunandan, Faculty of Commerce, SVS College, Bantwal-Karnataka-India
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Banker’s Final Accounts
B.V.Raghunandan, SVS College,
Bantwal-574211-Karnataka
Banker’s Balance Sheet: Liabilities Side
Capital and LiabilitiesSchedule No
Amount
1.Capital2.Reserves and Surplus3.Deposits4.Borrowings5.Other Liabilities and Provisions
12345
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Assets Side of Banker’s Balance Sheet
AssetsSchedule No.
Amount
1.Cash in Hand and Balance with RBI
2.Balances with other banks, Money at Call and at Short Notice
3. Investments4.Advances5.Fixed Assets6.Other assets Total
6
7
89
1011
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Profit and Loss AccountParticulars Schedule No Amount
I. Income: Interest Earned Other Income
TotalII. Expenditure: Interest Expended Operating Expenses Provisions and Contingencies TotalIII Profit/Loss: Net Profit for the Year Profit/Loss b/f from last year TotalIV Appropriations: Transfer to Statutory Reserve Other Transfers Balance C/fd to Balance Sheet Total
1314
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1516
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Schedule 1-Capital
Particulars Amount
Authorised Capital--------Shares of Rs…….eachIssued & Subscribed Capital……….Shares of Rs---------each(-) Calls Unpaid/Calls in Arrears
Total-----------
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Schedule 2: Reserves & Surplus
Particulars AmountI. Statutory ReserveII. Capital reserveIII.Securities Premium AccountIV.Revenue and other ReservesV.Credit balance in Profit & Loss
A/c Total
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Schedule 3: Deposits
Particulars AmountI. Demand Deposits: a. From Banks b. From Others II. Savings Bank DepositsIII. Term Deposits
Total------------
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Schedule 4: Borrowings
Particulars AmountI. Borrowings in India: a. RBI b. Other Banks c.Other InstitutionsII. Borrowings Outside India
Total
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Schedule 5: Other Liabilities & Provisions
Particulars Amount Rs.
I. Bills PayableII.Inter-Office AdjustmentsIII.Interest AccruedIV.Others (including
Provisions) Total
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Schedule 6: Cash in Hand and with RBI
Particulars AmountI. Cash in Hand (including
foreign exchange)II.Balances with Reserve
Bank of India (a) In current account (b) in other account Total
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Schedule 7: Balances with Banks and Money at Call & at Short Notice
Particulars Amount Rs.
I. In India: (a) Balances with Banks: 1. Current Accounts 2. Deposit accounts (b) Money at Call & at Short Notice 1. With Banks 2. With other InstitutionsII. Outside India 1. Current Accounts 2. Deposit Accounts 3. Money at Call & at Short Notice Total
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Schedule 8:Investments
Particulars Amount Rs.I. Investments in India 1. Government Securities 2. Other Approved Securities 3. Shares 4. Debentures and Bonds 5. Investment in Subsidiaries 6. OthersII. Investments Outside India: 1. Government Securities 2. Investment in Subsidiaries/Joint Ventures 3.Other Investments Total
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Schedule 9: Advances
Particulars Amount Rs
1. Bills Purchased and Discounted2. Cash Credits, Overdrafts and Loans
Repayable on Demand3. Term Loans: Secured by Tangible Assets Secured by Bank/Government Guarantees Unsecured4. Advances in India: a. Priority Sector b. Public Sector c. Banks d. Others5. .Advances Outside India Total
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Schedule 10: Fixed Assets
ParticularsAmount Rs
I. PremisesII. Building under ConstructionIII.Other Fixed Assets Total
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Schedule 11: Other Assets
Particulars Amount Rs
I. Inter-Office AdjustmentsII. Interest AccruedIII.Tax Paid in Advance/TDSIV.Stationery and StampsV.Non-Banking Assets acquired in
satisfaction of claimsVI.Others Total
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Schedule 12: Contingent Liabilities
Particulars Amount Rs.
I. Claims against the Bank not Acknowledged as Debt
II. Liability for Partly Paid InvestmentsIII. Outstanding Forward Exchange
ContractsIV. Guarantees Given on behalf of
CustomersV. Acceptances, Endorsement and other
ObligationsVI.Other Contingent Liabilities Total
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Schedule 13: Interest Earned
ParticularsAmount Rs.
I. Interest/Discount on Advances and Bills
II. Income on InvestmentIII.Interest on Balances with
other Banks including with RBIIV.Others Total
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Schedule 14: Other Income
Particulars Amount Rs
I. Commission, Exchange and BrokerageII. Rent ReceivedIII. Profit on Sale of Investment (-) LossIV. Profit on Revaluation of Investments (-)
LossV. Profit on Sale of Land, Building and
other AssetsVI.Profit on Exchange Transactions (-) LossVII.Income Earned by way of DividendVIII.Miscellaneous Income
Total------------------
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Schedule 15: Interest Expended
Particulars Amount Rs.I. Interest on DepositsII. Interest Paid to RBI and other
BanksIII.Others Total
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Schedule 16: Operating ExpensesParticulars Amount Rs.
I. Staff and Employees 'RemunerationII. Rent, Taxes and LightingIII. Printing and StationeryIV. Advertisement and PublicityV. Depreciation on Fixed AssetsVI.Directors’ Fees, Allowances and ExpensesVII.Auditors Fees and ExpensesVIII.Law ChargesIX.Postage, Telegrams, Telephone etcX. Repairs and MaintenanceXI.InsuranceXII.Other Expenditure Total --------------------
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Items Peculiar to Banker’s Balance Sheet
• Rebate on Bills Discounted: The amount of discount pertaining to the unexpired period
• Treatment -As a Trial Balance Item: Should be shown on the liabilities side under the head, "Other Liabilities & Provisions” [Schedule 5]
• As an adjustment Item:
a. Deduct it from Discount included in “Interest Earned” in the Profit & Loss Account[Sch. 13]
b. Show it on the Liabilities side under the head
"Other Liabilities & Provisions” [Schedule 5]
Inter-branch Adjustment
• Transactions between the branches arising out of remittances create inter-branch indebtedness
• It is shown as Inter-branch Adjustment• It is shown on the Assets Side of the Balance
Sheet, if it has a debit balance[Sch.No.11-Other Assets]
• It is shown on the Liabilities side, if has a credit balance[Sch.5-Other Liabilities]
Non-Banking Assets
• Assets acquired by a Bank in the process of lending i.e., selling off the tangible property of the borrowers in case of default in the payment of loan or interest
• Shown on the Assets side of the Balance Sheet [Sch.No.11-Other Assets]
Statutory Reserve
• Sec 17-At least 20% of the profits prior to declaration of dividend must be transferred to Reserve Fund
• It should be done even if the problem does not make any mention of it
Bills Purchased and Discounted
• These are bills of exchange purchased by the Bank from the customers or discounted by it. For the Bank, these are assets. The Bank holds them as Holder for Value and not as agents of the customers
• They are part of Advances and hence shown under Schedule 9 on the Assets side of the balance Sheet
Travellers’ Cheques
• Cheques issued to the Travelling Customers against payment of cash. Any person can pay the money and request the Bank to issue TC. He can encash it at other branches or other banks. They are treated as Bills Payable and shown under Schedule 5 [Other Liabilities and Provisions]
• TCs encashed given as adjustment should be treated as Deduction from Bills Payable on the Liabilities side and Cash in Hand on the Assets side
Letters of Credit
• Importers deposit money and get the LC issued to their name. On the basis of that, the customer can draw a Bill of Exchange and the Banker accepts it
• Like TC, this is Bills Payable and hence shown under Schedule 5 [Other Liabilities and Provisions] on the Liabilities side of the Balance Sheet
Bills for Collection
• These are Bills of Exchange received by the Bank from the customers as Agent for Collection. They are neither assets nor Liabilities
• Hence they are shown as Footnote to the Balance Sheet by way of information
Acceptances, Endorsements and Other Obligations
• The bank undertakes certain liabilities on behalf of the customers like accepting a Bill of Exchange or endorsing it. As long as the customer is solvent, there is no problem for the banker. If the customer becomes insolvent, it becomes a liability for the banker. Therefore, it is a Contingent Liability and shown below the Balance Sheet as an information
Payment of Dividend
• A bank can pay dividend only after it writes off all the capitalised expenses [as shown under the heading, ’Miscellaneous Expenditure’ in case of a joint stock company] like Preliminary Expenses
Bad Debt and RBD
• They are treated in the same way as in the case of a joint stock company
• Bad Debt is shown under Provisions and Contingencies under Expenditure in Profit and Loss A/c. New RBD is to be added to Bad Debt and the old RBD is to be deducted.
• The New RBD is shown as a deduction from Advances on the Asset side of the Balance Sheet [Schedule 9]
Provision for Taxation• New Provision for Taxation, given in the
adjustment should be deducted from Interest and Discount in Schedule 13 in Profit and Loss Account and again shown under Other Liabilities and Provisions [Schedule 5]
• Income Tax Paid, Old Provision and New Provision should be adjusted to Interest and Discount under Schedule 13- The rule is
IT + New Provision-Old Provision. Positive balance should be deducted and negative balance is to be added
Advance Income Tax Paid
• This is to be treated as any prepaid expense. It is shown under Assets side under the heading,” Other Assets [Schedule No.11]
Tax Deducted at Source
• TDS may have debit balance or credit balance• The debit balance shows the deduction made
by others while paying the interest or dividend. It is shown under Other Assets [Schedule 11]
• The credit balance indicates Tax Deducted by the Bank while crediting or paying the interest to others. It is a liability and hence shown under the heading’ Other Liabilities and Provisions’
[Schedule 5]
THANK YOU
